Distributions at Retirement

Publications and Resources

401(k) Fee Disclosure Form. ACLI, working with the American Bankers Association and the Investment Company Institute, developed a 401(k) Fee Disclosure Form designed to assist companies in making informed cost-benefit decisions when selecting 401(k) service providers.

Upon retirement you may have several options for accessing your savings. Many defined contribution plans permit you to:

  • Annuitize, or take the money in a steady stream of income to last your lifetime. If this option isn't available, you can transfer the distribution to a Rollover IRA then annuitize the IRA. By doing this, you avoid immediate tax on the entire distribution; the annuity is taxed as you receive the periodic payments.
  • Transfer all or part of the money to a Rollover IRA. Be sure have the transfer made directly so that tax won't be withheld.
  • Take systematic withdrawals.
  • Leave the money in place. If this is your choice, be sure to pay attention to your account statements and to the health of the company.
  • Take a lump sum, and pay tax--at ordinary income tax rates--on all of your contributions, your employer's contributions, and the earnings of both.

Note: Generally, you must start to withdraw funds from your defined contribution plan beginning either on the calendar year in which you reach age 72 or the calendar year in which you retire − whichever is later.  

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